VAL CO:R:C:V 547302er
Mr. H. Yamada
General Manager, Traffic and Insurance Dept.
Sumitomo Corporation of America
345 Park Avenue
New York, NY 10154-0042
RE: Request for Ruling; Dutiability of Documentation Charges; Charges Incident to International Shipment; 19 U.S.C. 1401a(b)(4)(A); 19 CFR 152.102(f).
Dear Mr. Yamada:
This is in response to your letter dated February 3, 1999, in which you request a ruling regarding whether a documentation charge should be included in the transaction value of merchandise imported by Sumitomo Corporation of America.
FACTS:
You inform us that effective January 1, 1999, a documentation fee is assessed on cargo originating from Japan and exported by sea or air to the United States. Rule 2.14 of the Japan-U.S. Eastbound Freight Conference states that a documentation fee of 3,500 Yen or US$30 must be prepaid by the shipper/consignee or paid on a “collect” basis if mutually agreed to by the shipper or consignee prior to issuance of bills of lading. This documentation fee represents a fee paid to the shipping company for preparing and delivering a bill of lading or waybill. Delivery terms are generally C & F or CIF.
It is your position that the documentation fee should not be included in the transaction value of the imported merchandise. You maintain that this documentation fee is a “cost, charge, or expense incurred for transportation, insurance, and related services incident to the international shipment of the merchandise from the country of exportation to the place of importation in the United States made, or to be made, for imported merchandise by the buyer to, or for the benefit of the seller”, in accordance with 19 U.S.C. 1401a(b)(4)(A). Attached to your submission were copies of various documents including: (1) a copy of a bill of lading which separately identifies the prepaid documentation fee from the prepaid freight charges and (2) copies of several letters from the Japan-United States Eastbound Freight Conference regarding the decision to impose the documentation fee.
ISSUE:
Whether the documentation fee represents part of the transaction value of the imported merchandise.
LAW AND ANALYSIS:
The preferred method of appraising merchandise imported into the United States is transaction value pursuant to section 402(b) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (“TAA”), codified at 19 U.S.C. 1401a. Section 402(b)(1) of the TAA provides, in pertinent part, that the transaction value of imported merchandise is the “price actually paid or payable for the merchandise when sold for exportation to the United States” plus certain additions. The term “price actually paid or payable” is defined in section 402(b)(4)(A) of the TAA as:
...the total payment (whether direct or indirect, and exclusive of any costs, charges, or expenses incurred for transportation, insurance, and related services incident to the international shipment of the merchandise...) made, or to be made, for the imported merchandise by the buyer to, or for the benefit of, the seller.
See also, 19 CFR 152.102(f).
In Headquarters Ruling Letter (“HRL”) 544538, issued December 17, 1992, Customs acknowledged that pursuant to section 402(b)(4)(A) the cost of international transportation is to be excluded from the price actually paid or payable for imported merchandise. However, Customs explained that in determining the cost of the international transportation or freight, it always looked to documentation from the freight company, as opposed to the documentation between the buyer and seller which often contains estimated freight costs or charges. In essence, Customs requires documentation from the freight company because the actual cost, and not the estimated charges, for the freight is the amount that Customs excludes from the price actually paid or payable. See, HRL 546029 dated December 12, 1995, and cases cited therein.
In this case, you submitted a bill of lading which identifies the actual amount of the documentation charges incurred as part of the international transportation of the imported merchandise as well as copies of letters from the Japan-United States Eastbound Freight Conference which document the decision to implement the documentation charge. While these documents do reflect the actual amount of the charge, at the time of the importation of the merchandise Customs may request the importer to present additional documents which pertain to the documentation charges. These additional documents may include the invoice from the seller and any contracts that may exist between the buyer and seller which have provisions regarding freight charges. Assuming the importer is able to present Customs with the additional documentation, and further assuming the payments are made by the shipping company and not to or through the seller or a party related to the seller, then the documentation charges incurred in connection with the international transportation of the imported merchandise should not be included in the transaction value of the merchandise.
HOLDING:
Based on the facts and documentation presented and subject to the caveats noted above, the documentation charges incurred in connection with the international transportation of the imported merchandise should not be included in the transaction value of the merchandise.
Sincerely,
Thomas L. Lobred, Chief
Value Branch